Oceaneering Announces Record Quarterly Earnings -- Narrows 2014 EPS Guidance Range to $3.95 to $4.05

-- Initiates Third Quarter 2014 EPS Guidance of $1.10 to $1.15

HOUSTON, July 23, 2014 /PRNewswire/ -- Oceaneering International, Inc. (NYSE: OII) today reported record quarterly earnings for the second quarter ended June 30, 2014.

On revenue of $927.4 million, Oceaneering generated net income of $110.3 million, or $1.02 per share.  During the corresponding period in 2013, Oceaneering reported revenue of $820.4 million and net income of $98.8 million, or $0.91 per share.


Summary of Results

(in thousands, except per share amounts)




Three Months Ended


Six Months Ended


June 30,


March 31,


June 30,




2014



2013



2014



2014



2013

















Revenue

$

927,407



$

820,372



$

840,201



$

1,767,608



$

1,538,924


Gross Margin

218,215



201,864



189,491



407,706



362,239


Income from Operations

161,311



146,337



132,862



294,173



254,627


Net Income

$

110,295



$

98,811



$

91,225



$

201,520



$

173,660

















Diluted Earnings Per Share (EPS)

$1.02



$0.91



$0.84



$1.86



$1.60


Year over year, quarterly EPS increased on profit improvements from Subsea Products, Remotely Operated Vehicles (ROV), and Subsea Projects.  Sequentially, quarterly EPS rose on higher operating income principally from Subsea Products and Subsea Projects.

M. Kevin McEvoy, President and Chief Executive Officer, stated, "Our quarterly EPS was slightly above our guidance, and was up 21% over the first quarter of this year and 12% over the second quarter of 2013.  EPS for the first half of 2014 was 16% higher than the first half of 2013.  We achieved record quarterly operating income from Subsea Products, and for the first time Subsea Products operating income exceeded that of ROV.

"Our outlook for the second half of this year remains positive and unchanged overall from last quarter.  Given this outlook and our year-to-date performance, we are narrowing our 2014 EPS guidance range to $3.95 to $4.05 from $3.90 to $4.10.  Relative to the first half of 2014, we expect to generate higher income from each of our operating segments during the second half, led by ROV and Subsea Projects.  We continue to forecast year-over-year operating income growth for all of our oilfield segments in 2014.

"Compared to the first quarter, Subsea Products operating income rose on the strength of increased revenue and profitability from tooling and subsea hardware.  Subsea Products backlog at quarter end was $850 million, compared to our March 31 backlog of $894 million and $902 million one year ago.  During the quarter we announced one large umbilical contract for offshore Indonesia.

"ROV operating income was essentially flat, as operating margin declined due to higher repair and maintenance expenses, unanticipated startup costs associated with placing new systems in service, and lower fleet utilization.  Revenue grew on increases in days on hire and revenue per day on hire.  During the quarter we put 13 new ROVs into service and retired 4.  At the end of June we had 323 vehicles in our fleet, compared to 296 one year ago.

"During the second half of this year, we expect to place at least 13 new ROVs into service, and we have contracts for all of these.  When these new vehicles are placed into service depends upon the actual commencement dates of new drilling rig and vessel project work.  We now anticipate adding 40 or more new systems to our ROV fleet in 2014.

"Sequentially, Subsea Projects operating income increased largely as a result of adding a vessel, the Bourbon Evolution 803, to our Field Support Vessel Services contract with BP for work offshore Angola and a higher profit contribution from the Ocean Alliance in the U.S. Gulf of MexicoThe Ocean Alliance was out of service for much of the first quarter undergoing a regulatory drydock inspection.  Asset Integrity operating income improved slightly due to a seasonal increase in activity in Europe and the Caspian Sea area.  Advanced Technologies operating income declined due to execution issues on certain U.S. Navy and industrial projects.

"For the third quarter of 2014, we are projecting EPS of $1.10 to $1.15.  We expect sequential improvements in income from all of our operating business segments, led by ROVs.

"Our liquidity and projected cash flow provide us with ample resources to invest in Oceaneering's growth.  At the end of the quarter, our balance sheet reflected $103 million of cash, $80 million of debt, and $2.2 billion of equity.  During the quarter we generated EBITDA of $217 million, $403 million year to date, and for 2014 we anticipate generating at least $855 million.

"In June we increased our regular quarterly cash dividend by 23% to $0.27 from $0.22 per share. This underscores our continued confidence in Oceaneering's financial strength and future business prospects.

"Looking beyond 2014, we believe that the oil and gas industry will continue its investment in deepwater projects.  Deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low finding and development costs.  With our existing assets and opportunities to add new assets, we are well positioned to supply a wide range of services and products to safely support the deepwater efforts of our customers."

Statements in this press release that express a belief, expectation, or intention are forward looking.  The forward-looking statements in this press release include the statements concerning Oceaneering's:  positive outlook for the rest of this year; 2014 EPS guidance range; forecast of higher income from all oilfield segments in 2014 compared to 2013; expectation of higher operating income in the second half of 2014, relative to the first half of 2014, led by ROV and Subsea Projects; statements about backlog, to the extent backlog may be an indicator of future revenue or profitability; anticipated additions to its ROV fleet in 2014; third quarter EPS guidance range; expectation of sequential quarterly improvements in income from all operating business segments, led by ROV; belief that its liquidity and projected cash flow provide ample resources to invest in the company's growth; anticipated minimum 2014 EBITDA; belief that the oil and gas industry will continue its investment in deepwater projects; and belief that deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low finding and development costs.  These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on current information and expectations of Oceaneering that involve a number of risks, uncertainties, and assumptions.  Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated.  For a more complete discussion of these risk factors, please see Oceaneering's latest annual report on Form 10-K and quarterly reports on Form 10-Q  filed with the Securities and Exchange Commission.

We define EBITDA as net income plus provision for income taxes, interest expense, net, and, depreciation and amortization.  EBITDA is a non-GAAP financial measure.  We have included EBITDA disclosures in this press release because EBITDA is widely used by investors for valuation and comparing our financial performance with the performance of other companies in our industry.  Our presentation of EBITDA may not be comparable to similarly titled measures other companies report.  Non-GAAP financial measures should be viewed in addition to and not as an alternative for our reported operating results or cash flow from operations or any other measure of performance as determined in accordance with GAAP.  For a reconciliation of our EBITDA amounts to the most directly comparable GAAP financial measures, please see the attached schedule.

Oceaneering is a global oilfield provider of engineered services and products, primarily to the offshore oil and gas industry, with a focus on deepwater applications.  Through the use of its applied technology expertise, Oceaneering also serves the defense, entertainment, and aerospace industries.

For further information, please contact Jack Jurkoshek, Director Investor Relations,
Oceaneering International, Inc., 11911 FM 529, Houston, Texas 77041; Telephone 713-329-4670; E‑Mail investorrelations@oceaneering.com. A live webcast of the company's earnings release conference call, scheduled for Thursday, July 24, 2014 at 11:00 a.m. Eastern, can be accessed at www.oceaneering.com/investor-relations/.

 



OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS


















Jun 30, 2014


Dec 31, 2013

















(in thousands)

ASSETS




















Current Assets (including cash and cash equivalents of $103,330 and $91,430)











$

1,530,712



$

1,433,275



Net Property and Equipment











1,312,585



1,189,099



Other Assets











539,887



506,126





TOTAL ASSETS


$

3,383,184



$

3,128,500























LIABILITIES AND SHAREHOLDERS' EQUITY











Current Liabilities











$

767,107



$

727,088



Long-term Debt











80,000





Other Long-term Liabilities











363,447



357,972



Shareholders' Equity











2,172,630



2,043,440





TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$

3,383,184



$

3,128,500























CONDENSED CONSOLIDATED STATEMENTS OF INCOME





























For the Three Months Ended


For the Six Months Ended








Jun 30, 2014


Jun 30, 2013


Mar 31, 2014


Jun 30, 2014


Jun 30, 2013








(in thousands, except per share amounts)























Revenue




$

927,407



$

820,372



$

840,201



$

1,767,608



$

1,538,924



Cost of services and products




709,192



618,508



650,710



1,359,902



1,176,685




Gross Margin





218,215



201,864



189,491



407,706



362,239



Selling, general and administrative expense


56,904



55,527



56,629



113,533



107,612




Income from Operations


161,311



146,337



132,862



294,173



254,627



Interest income




41



243



79



120



433



Interest expense




(398)



(553)



(411)



(809)



(1,316)



Equity earnings (losses) of unconsolidated affiliates


8



(186)



(36)



(28)



(25)



Other income (expense), net




(417)



(1,591)



294



(123)



(201)




Income before Income Taxes




160,545



144,250



132,788



293,333



253,518



Provision for income taxes


50,250



45,439



41,563



91,813



79,858




Net Income





$

110,295



$

98,811



$

91,225



$

201,520



$

173,660























Weighted average diluted shares outstanding


108,421



108,713



108,724



108,571



108,662


Diluted Earnings per Share


$

1.02



$

0.91



$

0.84



$

1.86



$

1.60























The above Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Income should be read in conjunction with the Company's latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

 

SEGMENT INFORMATION







For the Three Months Ended


For the Six Months Ended







Jun 30, 2014


Jun 30, 2013


Mar 31, 2014


Jun 30, 2014


Jun 30, 2013







($ in thousands)















Remotely Operated Vehicles


Revenue



$

268,274



$

242,163



$

255,819



$

524,093



$

471,791



Gross Margin



$

86,685



$

80,180



$

87,190



$

173,875



$

156,334



Operating Income



$

75,825



$

69,219



$

76,740



$

152,565



$

135,054



Operating Income %



28

%


29

%


30

%


29

%


29

%


Days available



29,059



26,884



27,851



56,910



53,099



Days utilized



24,510



22,362



23,869



48,379



44,066



Utilization %



84

%


83

%


86

%


85

%


83

%





















Subsea Products


Revenue



$

327,252



$

258,016



$

260,010



$

587,262



$

472,021



Gross Margin



$

99,558



$

82,389



$

75,129



$

174,687



$

144,734



Operating Income



$

79,497



$

62,060



$

54,516



$

134,013



$

104,839



Operating Income %



24

%


24

%


21

%


23

%


22

%

Backlog at end of period



$

850,000



$

902,000



$

894,000



$

850,000



$

902,000






















Subsea Projects


Revenue



$

136,199



$

118,195



$

138,190



$

274,389



$

206,650



Gross Margin



$

30,122



$

27,991



$

24,409



$

54,531



$

42,912



Operating Income



$

25,863



$

23,990



$

20,537



$

46,400



$

35,610



Operating Income %



19

%


20

%


15

%


17

%


17

%





















Asset Integrity



Revenue



$

130,229



$

124,740



$

124,159



$

254,388



$

239,589



Gross Margin



$

23,207



$

23,529



$

21,866



$

45,073



$

42,568



Operating Income



$

15,915



$

16,639



$

14,085



$

30,000



$

28,978



Operating Income %



12

%


13

%


11

%


12

%


12

%





















Advanced Technologies


Revenue



$

65,453



$

77,258



$

62,023



$

127,476



$

148,873



Gross Margin



$

5,597



$

14,945



$

7,727



$

13,324



$

28,253



Operating Income



$

198



$

10,165



$

2,955



$

3,153



$

18,841



Operating Income %



%


13

%


5

%


2

%


13

%





















Unallocated Expenses



















Gross margin expenses



$

(26,954)



$

(27,170)



$

(26,830)



$

(53,784)



$

(52,562)


Operating income expenses



$

(35,987)



$

(35,736)



$

(35,971)



$

(71,958)



$

(68,695)




















TOTAL



Revenue



$

927,407



$

820,372



$

840,201



$

1,767,608



$

1,538,924



Gross Margin



$

218,215



$

201,864



$

189,491



$

407,706



$

362,239



Operating Income



$

161,311



$

146,337



$

132,862



$

294,173



$

254,627



Operating Income %



17

%


18

%


16

%


17

%


17

%





















SELECTED CASH FLOW INFORMATION







Capital expenditures, including acquisitions



$

157,450



$

81,138



$

104,038



$

261,488



$

175,315


Depreciation and Amortization



$

56,057



$

50,173



$

53,351



$

109,408



$

100,025






















 



RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION





















For the Three Months Ended


For the Six Months Ended




Jun 30, 2014


Jun 30, 2013


Mar 31, 2014


Jun 30, 2014


Jun 30, 2013




(in thousands)




















Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)


































Net Income

$

110,295



$

98,811



$

91,225



$

201,520



$

173,660




Depreciation and Amortization

56,057



50,173



53,351



109,408



100,025




Subtotal

166,352



148,984



144,576



310,928



273,685




Interest Income/Expense, Net

357



310



332



689



883




Provision for Income Taxes

50,250



45,439



41,563



91,813



79,858




EBITDA

$

216,959



$

194,733



$

186,471



$

403,430



$

354,426










































































2014 Estimates













Low


High









(in thousands)



Net Income










$

430,000



$

440,000




Depreciation and Amortization










230,000



235,000




Subtotal










660,000



675,000




Interest Income/Expense, Net















Provision for Income Taxes










195,000



200,000




EBITDA










$

855,000



$

875,000






































































 

SOURCE Oceaneering International, Inc.



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